Zillow’s New Housing Forecast + Where Rates Are Headed Next

Zillow just made a new prediction about home values, and it's got a lot of people wondering if the market is about to change. But here's the bigger question: what happens if home prices start to shift at the exact same time interest rates begin to move in the opposite direction? That's what we're breaking down today and what it means for you. So stay tuned and get ready to take some notes.

Hello everyone. Welcome to this week's Mortgage Minute. My name is Art Alvarez with MortgageWorks, where we have the answers and they're on the house. And yeah, as you just saw in that opening, we're going to come back to talking a little bit about a recent Zillow article about a potential shift in the market. So definitely stay tuned for that. In the meantime, here we are in the Coachella Valley in the greater— we're in Palm Springs in the greater Coachella Valley area. We're on our final leg of the April festival. Stagecoach is this weekend. And then once that's over, then we are essentially coming to the end of our season here out in the desert. Uh, not to say that we're a ghost town in the summertime because we get a lot of folks, local folks, more Southern California folks who do like to come out here on the weekends even, even well into the summer and the hottest months of the year like August and September and so forth. So, uh, I guess the big news, uh, sports-wise is we got the NFL Draft about to happen. In the meantime, I'm keeping an eye on my, my Angels. They're kind of hanging in there. Mike Trout thankfully seems to be back in a big way. Just need to get his average up a little bit more. But shoot, 8 home runs already. At that pace, I think he'd end up getting 50+ for the year. So we'll see what goes on there. First thing we're going to do is show you our rate grid that's on our website. Of course, I'll tell you in a minute here that Turns out I'm gonna have to make some adjustments on what you're seeing right now. We did this this morning. Rates were actually looking pretty encouraging. You can see with most of ours, we're breaking through the 6% barrier into the very high 5s, uh, but we've had some deterioration in the bond market mid-morning and going into the afternoon. So that may affect what you're seeing right now as we go into tomorrow. Um, and but otherwise, you know, this is still overall, I think, a pretty good indication that No need to panic about rates. Yeah, they are elevated a little bit with the Iran situation and oil prices and so forth, but they haven't gone crazy high on us. And so I think these are very workable when you look at interest rates from historical perspective. We're going to show you the 10-year bond yield chart for the past 5 days going back to last Friday. And there you see it. Actually, we were almost as high at the end of last week. And we had some nice improvement earlier this week, uh, up until Tuesday. And then unfortunately, rather than seeing Jeff's favorite Wednesday dip, we ended up going the other direction. And Wednesday we had an uptick, and then of course a further uptick today. And I've yet to be able to check the news, uh, the financial news, to find out what has occurred here, uh, late in the day for this bond yield to get elevated. Actually, the last I checked just before we went live here is, uh, that yield was more like 4.34. So We'll see what tomorrow brings, although there's not really much in the way of data. In fact, let's go ahead and go to that, and I'll show you or talk to you briefly about what's been moving, you know, what's going on in the financial markets to, you know, affect bond yields and therefore mortgage rates. And actually, overall, not a whole lot of data this week. It's pretty darn light. So when you look at it, basically the big news for this week was retail sales. Up 1.7% in March. That was way higher than expected. It was only 0.7% in February. Of course, then when you peel the onion, uh, that 1.7%, a big chunk of that was gasoline prices, because of course you buy gas, that's considered a retail sale. So of course that 1.7% number is inflated because of the increase in gas prices from the Iran War situation. But however, if you peel that away, it was determined that it's still 0.7 in March if you leave out gas prices. So in that respect, it's holding up pretty well. Retail sales are doing pretty darn well. So the idea that the economy is softening and we're getting into a recessionary situation doesn't seem to be showing in the data, at least not yet. The other thing, pending home sales actually were a surprise, up 1.5%. For the most recent month. That was not expected, uh, and it's interesting that that did happen because again there was a belief that, uh, home sales were going to be adversely affected. And seems to be some data to suggest that has happened as it relates to, again, the Iran war situation. But that was a surprisingly optimistic and good number, so it was nice to see. And I think it shows a little bit of an acceptance that rates are where they're at and some folks just can't wait any longer and you've got to make a move. It's time to do it and try to do it now. Um, the only other couple of data points this week, um, S&P— that's Standard Poor's— U.S. Services and Manufacturing Purchasing Manager Index. That's a pretty long title for this data, but both services and manufacturing unexpectedly improved over the previous month. So again, pretty good signs the economy seems to be doing fine. And the last thing, consumer sentiment's coming out tomorrow, and it's projected to be actually higher than was in March, and that would be again interesting considering there's been a lot of concern about sentiment with Iran War, the higher oil prices, gas prices, the adverse effect on the economy, the potential inflationary effects, uh, that it may have. But so far, economy seems to be doing fine. Corporate earnings are really good, and that's why the stock market seems to be, uh, you know, doing very well despite all the negative news. So it's an interesting time, let's put it that way. So from that, I want to move over to, you know, we talk— typically talk about a product, a mortgage product or loan product. I'm going to do that right now, but it's a little bit different than a typical loan product like a conventional loan or an FHA loan or a, you know, a VA loan and so forth. What I want to talk about is VantageScore loans. Now, what is that? Well, it's actually not really a loan program per se, but it's that That label that's already been created is, uh, to describe loans that are going to be using the VantageScore— actually what's called 4.0— a credit scoring model. Uh, so let me dive into that a little bit because there's some good news for the borrowers as part of all this. The Federal Housing Finance Agency announced that VantageScore 4.0 to be accepted by the quasi-agencies, federal agencies, Fannie Mae and Freddie Mac, as well as the federal agencies Ginnie Mae and of course FHA, or which is of course part of HUD. So that's good that the conforming agencies are now going to be accepting this particular type of credit scoring for the credit report. Now, what— where did VantageScore come from? Because we all think in terms of FICO. FICO is the company that developed credit scores and pretty much is, you know, the standard in terms of the industry, including for mortgage credit reports. Well, VantageScore, interestingly, is owned by the 3 bureaus: TransUnion, Experian, and Equifax. And a big part of the benefit of the agencies now accepting this type of scoring is the cost. VantageScores will involve— when a VantageScore is pulled, it's going to be $0.99 per loan. Right now, FICO charges $10 per loan for the hard pull. So that obviously, that's quite a difference in terms of cost. 99 cents for VantageScore per loan, or $10 per loan if it's a FICO pulled score. So that obviously is what this is all about is it's attacking the cost of credit reports. Why am I saying that? Well, I've mentioned it on this show a couple of times, and for anybody who's recently got a loan from us, you probably have seen this. Credit score costs have gone up, uh, considerably. Like, as the slide here shows, over 400% increase in the— in less than 5 years. You know, back 5 years ago, we, uh, if we pulled a joint mortgage credit report with all 3 bureaus, you know, for a married couple, $30, like $29 actually, $28, $29. Now, uh, guess what? It's $162. Um, if we pull an individual borrower's credit report, a single person, that cost me again, uh, less than 5 years ago would have been down lower 20s or even the high teens. Now, $102 to pull a 3-bureau credit report, um, for a single borrower. And this has been very disruptive in the industry, particularly as it relates to pre-qualifying homebuyers, because it puts us in a difficult financial situation. Because yeah, in the past, if we were going to pre-qualify a married couple, we're going to spend $28, $29. We would not collect that money at the time of pre-qualifying that that borrower. Uh, we would hopefully collect it back as a reimbursement if they were able to. After we pre-approved them, they find a home, make an offer, get it accepted, we do the loan, we get reimbursed. But we took the risk that if the loan never came to fruition, we wouldn't recover the money. Cost of doing business. That was working out fine for years. Well, with this dramatic increase in credit report cost, it's not financially doable to continue to have that kind of policy. I recently was presented with the need to qualify a married couple and two of their children, adult children. Well, the combined credit score cost just to do the prequal was going to be nearly $400. So unfortunately now, too often in most cases, we have to collect the credit report money at time it's ordered rather than getting reimbursed. So the idea here also, by the way, is there's going to be separate pricing guidelines. What does that mean? Well, I won't get into the technical, uh, issues on it too much, but when Fannie Mae and Freddie Mac, the two conventional quasi-government federal agencies, when they're pricing out mortgages that they're going to purchase from lenders, how they price the purchase of those mortgages from lenders is going to be different whether it's a VantageScore or a FICO score. And there's some technical reasons for that, but the point is there is going to be separate pricing guides depending on which credit report scoring scoring model is going to be used in some of these loan files. I don't think that's going to be a significant difference, that it's going to, you know, be glaring and maybe, maybe hard to, to, to deal with. But just keep in mind that there will be some of that because there's some belief, argument, that the VantageScore is not as good of an indicator of credit risk. It may be creating more risk to lenders, but there's some pushback from the credit bureaus about that, and that's sort of a brewing and ongoing debate within the industry. So they're going slow with this. It turns out they've already— Freddie Mac's already closed about $10 million worth of loans, or purchased about $10 million worth of loans involving these VantageScore credit reports. So they've already tested it, they like what they see, and so that's why the FHFA has opened it up to be used in a much broader situation. And again, the bottom line is the VantageScore 4.0 is, you know, major part of this effort is to get these credit report costs back down to a reasonable because it frankly just doesn't make any sense where these fees are at right now. It's been really a very big problem. And of course, a cost that unfortunately we have to pass on to the borrower. So with that, we want to go ahead and get into our discussion as we open the program with, with that little teaser about the Zillow article. So that's what we want to get into here right now. And I'll see if Jeff wants to come back on that, or if I'll just jump into what we have here on the slides.

Hey, Art. Can you hear me, Art?

Can hear you.

Okay, good. I didn't know for sure if you could hear me. Yeah, I'm looking forward to that. I'm just curious about— because you've talked about before we go to this hard on— is the, the cost of those, uh, reports. When you break those out, is it going to be one of those things where it's a disadvantage if somebody goes to the let's face it, 1/10 the cost using this new form?

You know, I don't think so. But the argument, because there's this raging controversy about, you know, this kind of score, maybe this VantageScore may be presenting too much risk to lenders because I think the concern has been that the VantageScore may prove to be just less accurate and effective in terms of assessing credit risk of a borrower. Because allegedly the scoring model is a little bit different. Maybe isn't going to use quite all the available data that the 3-bureau current merge reports, uh, gather. Uh, I don't know. I mean, I— again, they've already been testing this out. They've kind of under the radar— Freddie Mac, in the, in the news, you know, flash about this, said that, hey, we've already purchased $10 million worth of mortgages as a little bit of a, you know, pilot, test pilot kind of a situation. And so I think they're— they were going kind of slow, but they've already seen enough think that it's okay to get this out there, because these credit report costs are just ridiculous. And, and they, they have no, no bearing on what should be a reasonable, you know, fee to charge to get this kind of data. I mean, everything's like, you know, basically automated, and it's readily available, and so forth and so on. I mean, it's just, it's just a, it's a very strange occurrence. I mean, I mean, it just came out of nowhere. And of course, it I don't know if it's a coincidence or not. It came, it came out of the pandemic period. And of course, mortgage volume was way up for both refis and purchase transactions. And, and then, you know, of course, there was all the thing after the pandemic, rates went up and of course home prices almost doubled from 2019 to now. But it's like, so credit report costs had to go up that much too. Why? I mean, it does. It's the same process, same product that we've been getting and paying for for years.

I'm just curious, you know, when we think about, uh, you know, monopoly monopolies in the U.S., you know, we break those up so that there's fair competition. When it comes to the credit scores, is there someone else that you can say, well, I don't want to use FICO, I'm going to use somebody else's score scoring and get the loan done?

No, that's why this— no, that's why this is making the news is because we are beholden to whatever the agencies require as to the type of report to be in the loan file that they're purchasing from the lender. So we don't get to say, well, we don't like, you know, Fannie Mae, we don't like your preferred, you know, credit scoring model, we want to use this one over here. You can't do that. So that's why this is news, is because pretty much we've all been held to the same kind of credit report product. It's been the same one for quite a long time. Using the same scoring model for the most part. And now here's another alternative that is in part intended to drive down the cost of these reports significantly. And so that's where we're at, and that's why it's like the first time I can remember really opening it up for a little bit of competition in terms of scoring models that are going to get used.

I, I'm excited about it, uh, just because I heard you, you talk about the, the costs, and now you know, I see all the time in the news is they keep blaming the cost of loans, you know, the creation of it. And it's like, wow, just that one piece, bringing it down to 1/10 of the cost is a, is a huge— if I, if I saw that correctly, $0.99 versus, versus— well, no, it's more than that, isn't it?

Well, we don't know for sure. I mean, that's— in fact, I meant to mention that on the, on the slide, is that that's can be a little bit misleading because 99 cents per report versus $10 per report, that's really— either number is relatively small portion of the total. Remember, right now if I pull a joint credit report for, uh, a prequalification of home buyers, um, and we buy ours from a company called Cisco Credit, it's $162. So there's a lot more in there than just the FICO pull versus the VantageScore pull, you know, the industry is pointing their fingers at FICO thinking that FICO bumped up the— what they charge to just be able to use the score, like their royalty, if you will. And they're like, no, no, it's the credit bureaus' fault. It's not us, it's not FICO, it's the credit bureaus. And of course, and the industry is therefore also criticizing credit bureaus, and yet now we're endorsing a new product that's owned by the credit bureaus. It's supposed to drive down the cost. So on the one hand, the industry's criticized the three bureaus for high credit report costs, but now endorsing those three bureaus' new product to reduce the cost.

So I guess you have to let it play out a little bit, right?

Yeah, exactly.

Well, let's talk about the Zillow article that came out, and they're predicting a market shift. Let's talk about that, you know, because I don't know about you, but when we talk to people, whether we're going to buy a car, we're going to buy a home, you know, invest, whatever it is, we're, we're trying to think, hey, where is the future in this? And I think that's one of those things where, you know, the first thing is, what does Zillow say? They say slower price growth. What does that mean?

Well, it's interesting. You know, I've read the article and one thing I notice is that It did. In fact, kind of early in the article, it opened with their estimate that home values are going to be up 0.3% at the end of 2026. That's, you know, that's pretty modest. Yeah. So then they try to go into sort of explaining, well, you know, kind of the underlying basis for, you know, that kind of prediction. And they pointed out a couple of things. Back in March, they apparently had forecast that the improvement, um, in terms of increasing, uh, existing home sales rate, that back in March they were predicting that for 2026 it would be up 3.4% year over year. And of course, if that were, you know, if that came out to be true, that would kind of run in conflict with the idea that home price growth is going to slow, or the property you know, price growth is going to slow because that's pretty good increase in demand, and you would think that would help firm up prices and even get them to go up a little bit. But what happened was after March, they revised their forecast, and now they're forecasting 0.5% year over year for 2026 for existing home sales. Wow. So you're like, okay, so, um, They are predicting therefore that there's going to be slower price growth. They also, by the way, in the, in the article made a point of emphasizing inventory has grown. So you've got, uh, well, we revised our estimate that existing home sales are going to not be 3.4% for '26, they're going to be 0.5% increase for '26, and we are pointing out there's more inventory. But we also think the problem here is affordability in terms of interest rates. So again, it's sort of like it's the— it's high borrowing costs, they called it. And so to me, again, this is another example of where the, the interest rate part of the equation kind of gets to be the fall guy, and it's all about the these high, high interest rates. And as a consequence, that's why affordability is such a problem. It's, in my opinion, not enough focus on what the price of the home is, because again, if you have more inventory— and that's what we've been seeing pretty much all year, a gradual increase in inventory— that equals what we would consider a normal market, a balanced normal market. And that, you know, historically that was 6%. or 6%, 6 months based on the current sale rate. And it's been getting close to like over 4, you know, in the low 5s. We're getting pretty close. So it's like, well, wait a minute, we have a— if we have a, you know, healthy, normal, standard market, should home price, you know, growth really be getting adversely affected that much? And of course, again, what they point out to is it's all about higher borrowing costs, which in my mind is I think overstating the problem, but also, I think, is causing too many people to just say, oh, okay, well, that's the case. I'm not even going to try. So I think we got to fight through that. But one of the things this article got me thinking about, and of course, I wanted to do a little research, so I did. Let me give you some numbers because this is, I think, a good example of maybe human behavior. Because the— what you're going to see here is like, it all doesn't quite make total sense to me. So here's what I did. I looked up what's the average rate for a car loan in the U.S. right now. Hmm. A new car, 7%. A used car, 11%. But I don't know about you, last I heard, home prices— or home prices— car prices just hit a new record. New, new car prices are now on average $51,000. And the average monthly payment for a car loan is over $800 a month.

That's insane.

So if— and by the way, we're talking about a rate on an asset that depreciates by 25% when you drive off the lot and it's going to depreciate further to the point where in most cases it's going to be worth nothing and you're paying a higher rate than you would for a mortgage. Um, so you start going, well, I'm not hearing all this, you know, negative headlines about car sales are in the dumpster, uh, nobody wants to buy a car, they can't afford them because the interest rate's too high. I'm not hearing that. Here's another example: credit cards. Average in the U.S. right now between 21% and 23%. The average credit card debt balance per person in the U.S., $6,500. Or per family somewhere in the $8,000 to $12,000 range.

Wow.

And again, that's money borrowed at somewhere approaching 25% interest. And most all of that money is spent on things that are not asset-based things of value in most cases, I would argue. So, but again, and you have people all complain about credit card rates. Being way too high, stupid high. Yet guess what happens to credit card usage? It's still going up. It's not being adversely affected. So car loans are not being adversely affected. Car sales— and I mean, car sales have moderated, they're kind of plateaued, but kind of like our housing market, but they haven't dropped. And the same with credit card usage, it's, it's, it keeps going up. Unsecured loans, same thing, 12 to 12.5% is the average. And then student loans, the average student loan is between 6.5 and 8.5%. Wow. And so when you look at all those different kinds of interest rates for the most common ways people borrow money, I don't know why the interest rate for a mortgage on a home where the mortgage is secured by an asset that has value and historically is likely to increase in value and build your, your wealth why that is, why these rates are, you know, so evil. Uh, and, and so part of what we keep talking about, and I hate to, you know, kind of belabor the point because I don't want to sound preachy, but mortgage rates right now historically are better, uh, than what they were historically. If you go back and look, Freddie Mac since 1971, the average interest rate between '71 and 2025, 7.7%. We're at 6%. Rates aren't the problem. Embrace them and we can help you figure out how to use them to get into buying the home now. So that's basically how I looked at this Zillow, uh, article is, yeah, the market's shifting. Uh, it's an odd market in that respect because, yeah, there's going to be more inventory, rates are not going to fall much at all, and yet they're concerned about buyers jumping in and be in there in terms of demand. And so that's why we're going to have slower price growth in housing, because even though there's more inventory and even though rates are historically okay, they're blaming the rates, uh, as to the reason why we're not getting more buyers to jump in in these conditions when they probably should be.

Well, you know, as you talk about this, I'm thinking I need to go buy another house because not another car Uh, it just— I had no idea the average car price had gone up to that much. And, and it's just— and you're right, you know, credit card, like you've said in the past, people have no problem going out and putting a $200 meal— you couldn't do it for $100 now, but $200 meal on a credit card they're paying 21 to 23% interest on. And yet they don't want to buy a home that is appreciating even at a small amount. I mean, if it goes up 1% a year That's, that's $8,000 to $10,000 in value, isn't it, on an average home in the, in the Coachella Valley?

Yes, yes. And yeah, I had— I have a more colorful, colorful way to say, describe the— yeah, only in America do you go out and, uh, I say now pay $300 for a nice dinner and put it on a 22% credit card, and, uh, I'll say complain about 6% mortgage rates. Oh, I'm going to pay it off at the end of the month. Oh, yeah, sure you will. Yeah.

Well, I'm wondering, Art, you know, we think about this. There's, you know, there's only so many ways you can slice a pie. Right?

Right.

And I'm just wondering now, because there are so many things where it's a car, it's a, it's a phone, you know, your, your, your phone that you have to pay for, you know, what's that monthly payment on that? And even though it's a $51,000 car, they've got it worked out for only $400, well, in this case, $800 a month. Is that just one of those things where they've just run out of pieces of the pie to say, I have spread myself so thin that I can't afford to invest in that asset that keeps going up in value, which again ties right back to that whole report you've given us that said, hey, the wealth of somebody who rents versus a buyer is 40 times greater as a property owner versus a renter. It seems like it all, it's all coming together. Or am I just, am I just under the art ether?

Well, no, no, I think that's, I think that's the rational, reasonable, logical way to look at it. And, but for whatever, and again, I get worried about, again, coming across as preachy and critical, but, you know, everybody's going to live their life the way they want to live it. But, you know, I have a hard time where, you know, all the headlines are, you know, moaning and groaning about how bad the housing market is and interest rates are way too high and I'm being shut out and can't afford a home. All the baby boomers own all the homes. And it's like, well, wait a minute, that's— if you really look at the current conditions, it's not so bad. Um, and so it's really a function of getting folks to kind of change how they're thinking because I think the conditions are there. And of course, the Zillow article, in my mind, again, it was another case of, well, wow, if I've been kind of wondering when to buy If there's slower price growth, that's good. Um, I'm okay with things moderating for a bit, so I have a chance to maybe get a decent, uh, you know, offer accepted. Um, and yeah, even with their— with these, you know, flattening or even minor declines, that's when if you see that, you maybe grab onto that. Uh, you've got a concession opportunity to be obtained if you recognize that. You've got less competition because according to Zillow, there's going to be existing home sales are going to slow down because there's not enough buyers jumping in in these kind of conditions. So I don't know, it's, uh, but again, in order to do that, you've got to reallocate what the money you've got coming in. I mean, I think I've said before, I mean, I, I'm— I like nice cars as much as anybody, but you got to make a decision about how much of your dollars you want to spend on that kind of asset that's not going to build wealth that's going to, you know, use up your wealth, as well as what you spend your credit cards on. And, you know, I can start sounding like Dave Ramsey, right, in terms of, you know, how do you best use your credit. But you— but there's some serious things to think about there about just shift things a little bit and kind of, you know, don't have two $800 car payments, have two $400 car payments. And just— you can still get a pretty nice car for $400. $500 a month instead of $800. I mean, but you got to make some choices there. And for some folks, they're not willing to do that. And that's okay. I totally respect that. But then at the same time, don't tell me how bad, you know, the housing market is if you don't choose to take advantage of it, if you make a little tweaks on your side. Because that's, I think, really what you want to think about if you're serious about, I want a more direct pathway to building wealth. Well, guess what? Buying a home is the best thing you could do. You've got to get through the numbers and understand where you've got to make those tweaks. We can help you do that. And then you're on your way. Yeah.

And I think the one of the— over the weekend I was at my niece's 30th birthday party and she was there with her boyfriend, which they're getting very close. They're going to be moving in and starting their lives together and they're 30 years old and he already owns— owns, not mortgages. He owns his condo already. And, you know, he did the sacrificing you're talking about to say he doesn't have to worry about a mortgage payment now. Yeah, he probably pays HOA dues. But the point is he owns his home that continues to grow up in value. So I'm really excited for him about that. But the big thing is here, the news always wants us to think when it comes to the housing market that it's a crashing situation. And you made it very, very clear, hey, we're not even at what used to be considered normal when it comes to inventories. So is it, as it says here, is it just adjusting or are we crashing?

No, it's adjusting. The market's adjusting. You know, it's going to adjust based on overall conditions, and that's all that's happening. There's no crash. I don't see any sort of crash on the horizons. I really don't. Um, and the economic data that we have covered earlier continues to keep pointing that out. I didn't mention it in initial claims for unemployment. Every week it's right there in the 205 to 215 range, every week. So it's not like suddenly a bunch of people are out of a job and having to go file for unemployment at levels we haven't seen. It's been very, very stable in a, in a, at a level that is pretty much considered normal. Because again, a 4% unemployment rate, that's in the, in the economics world, the science of economics, or some people say the art of economics, uh, a 4% unemployment rate is considered more or less the normal rate of unemployment. Employment. In other words, no matter what you do, it's hard nationally to get that number much lower. There's just going to be a natural rate of unemployment because not everybody wants to work, uh, and so you'll never get to zero. But, but the point is, so when you look at all that different data, it's like, man, the economy is actually pretty good. And again, for those who's, you know, they're secure in their jobs and in their income levels— and again, I, I think there's a lot more folks out there with income levels that are more than adequate to buy a home, and they've got to get some help and advice about understanding that opportunity is there and how best can you structure the numbers to get you into this, you know, wealth-building situation, because long term, that's the best thing for you and your family. So I love it.

Well, this next one is, uh, you know, so, so if home prices are starting to adjust a bit, the next question, and this is for you, is you say What about those interest rates? Are those— and more importantly, where are they headed over the next few years, Art?

Well, of course, I'll first tell everybody, if you go back to when we do the what's going on in the market to cause, you know, the bond yields and mortgage rates to change, you know, at the very bottom we say on interest rates, higher for longer. And so basically, in terms of answering this kind of question, that's where I'm going to take you on this. And there was a recent article in Yahoo Finance. It was very interesting because what it did is it focused directly on basically— and they, what they did is they used some, uh, in research from informed market participants along with AI. And so what they did is, yeah, they did a mortgage rate outlook for the next 3 to 5 years. And so it was a really interesting thing because, uh, they did kind of conclude a few things. One is that expectation that there'll be a gradual decline but not a sharp, sharp drop, um, and that likely the range will be over time mid-5 to low 6 range but not 3% again. Um, and then also what's driving where rates go— inflation plus Fed policy is still driving the direction. Uh, it was very clear that we are not going back to 3% rates, but we're also not stuck at today's highs forever. So let me dive into this a little bit more in terms of, you know, details about that overall outlook for, for the next 5 years. Uh, part of this is about the 10-year bond yield. Because what this article focused on was the, his, his, the projections, a forecast for a 10-year bond yield over the next 5 years. And interesting, the average is 4.05% at the end of 2026. That's where the 10-year bond yield would be. Right now we're at, you know, 4.35%. And then by the year 2030, end of 2030, it'll be at 3.92%. Well, guess what? We've been hovering in that range for quite a while over the last year or two. So we've already been there. But of course, this article is suggesting we're going to stay in that range for the next 5 years. Sound familiar? The other thing it talked about spreads, prepayment risk spreads are this, you know, mortgages are going to have us— the rate on a mortgage is going to be at a level where there's a spread between that mortgage rate and the 10-year bond yield rate. And historically, that's about a 2% spread. So, if you're around 3.92% to 4.05%, you add 2% of that, voilà, guess what? You're right around 6%, more or less where we've been for a good amount of time. We've been below 6% for quite a while, actually. So, given that case, with the 10-year bond yield forecast, 3.92% to 4.05%, and we have using a 2% average spread, that means the interest rate forecast from this article is 6.25%, gradually going down to 5.75% by the year 2030. So again, these are— that is a range that we've effectively been at for the last year or two. Um, and in fact, you know, in February we were approaching the mid-5s on a conventional conforming loan. So Again, in this article also made it very clear, no forecast for 3% rate anytime soon. Uh, and by the way, the, the, the market research, uh, information was used from, uh, Deloitte Global Economics Research, Goldman Sachs, and the Congressional Budget Office. So based on that, and I concur with the point of this article, We're going to be in this current range for an extended period of time. Folks need to embrace that and then recognize there are ways to use these current interest rate levels, negotiate concessions to affect what kind of rates you can get. That's something that we are expert at, uh, and we can help you do that. So how do you think about buying today based on all this data I just gave you? Well, the reality is a couple— a few things. If you're going to be still in the mode of waiting for more, uh, or for waiting for lower interest rates, what's going to happen to you is you're then going to be faced with more competition. Because as those rates lower, more folks should anyway come into the market based on seeing that rates are coming down. So understand that and understand therefore you have an opportunity to not wait for lower rates and go pursue something now. We can help you do, you know, get that rate adjusted to your advantage, but do that now by getting concessions from a seller so that you don't have as much competition and therefore get a more likely success rate at getting the concession you need for us to help you use to reduce the interest rate cost. And then If you realize that, then what's the opportunity? What that does is it allows you to buy now at these current, you know, moderated, even maybe in some markets slightly depressed prices, be able to buy now, lock in good mortgage terms, particularly if you can get concessions to adjust the interest rate that you're going to use, whether it's permanently or temporary. And then what you have is the one-sided bet. Your mortgage is in place. You know, worst case, what your mortgage rate and payment's going to be because it's a fixed-rate loan. But once you've got that mortgage and you've got that home ownership in place, when the market eventually approves— improves in terms of mortgage rates, which of course, based on what I just described, you're probably looking at 5 years or more— you will then have the opportunity to refinance into a lower rate And you can either go back to a 30-year term, or by the way, you can go to a shorter term like 25-year, or even an odd year like '22 or '21 or '20. '20 is not an odd year, and by the way, an underutilized loan term. It's one of my favorite loan terms to talk to borrowers about. So the point is you have that one-sided bet, the opportunity to get a rate now using concessions and then refi later. Excuse me. The other part of the opportunity is less competition today. There simply is. We've got more inventory and less competition. For a prospective home buyer, that's what you want. So understand that's true. It really is. Talk to a realtor. They'll tell you. They'll show you the data. And then of course, if you're convinced at that point it is time to buy, then we can help you with some numbers in terms of what kind of financing structure to use. Um, so again, less competition means better terms, and that's what we can help you with. So with that, just remember what we always say, it's very true in this current environment: marry the house and date the rate. If you get that concept, now's a great time to buy, and let us know how— what we can do to help you get there. Um, so with that I want to go to the— we've got, I think, one more slide to go over. We've got a market where prices may soften slightly and rates may improve slowly over time. So again, what does this create? It creates the moment as we're going to describe now, less competition, more negotiating power, and future refinance potential. Again, I went over all three of those points on the previous slide. So what that underscores is the biggest mistake right now isn't buying. It's sitting on the sidelines and waiting for the perfect conditions. Again, these conditions are prime for prospective buyers to get a really good deal in homeownership, purchasing the home not just on price but on concessions to significantly, significantly improve your mortgage financing cost. So don't hesitate. If you're interested, call me, call us. And we can help you get there and give you some numbers. There's our number right there, 760-969-5023. So give me a call or send me a text to my cell phone, 714-612-9035. Be happy to have that discussion with you and give you some numbers to carry on that discussion. And with that, we'll go ahead and conclude this week's Mortgage Minute. My name is Art Alvarez with MortgageWorks, where we have the answers and they're on the house. If you're a football, football person, enjoy that draft. Otherwise, if you're heading out here, uh, to Stagecoach this weekend, welcome to the valley and hope you have a great time. In the meantime, for everyone else, have a great weekend and we'll see you next week on the next, next edition of the Mortgage Minute. So long, take care.